Success With Assumable Mortgages With Stefani Howorth

What's up everybody? Welcome back to the New and Experienced Investor Podcast. Today we have an amazing show. We're talking about how to be successful with assumable mortgages. It's definitely a show you don't want to miss. I'm Alex Barnett. I'm one of your hosts. I'm the new guy.

And I'm Joe Homs. I'm the Experience Guy, and welcome to the number one podcast in Laguna Hills.

Reigning champs. Pretty amazing. Um, yeah, today we have an amazing guest with us. She's a local agent and expert on Southern California real estate market trends and assumable loans. So this is gonna be a show you absolutely don't wanna miss, and you wanna share this far and wide before we bring them on. Let's talk about our meetup we have coming up July 28th.

July 28th.

And there's nothing there.

Nothing where?

The meetup screen.

Oh, yeah. What is it? It's blank?

Yeah.

Yeah.

Oh, yeah.

There's nothing there because we haven't—

Mystery guest.

Yeah, we have a mystery guest and we haven't advertised who's going to be speaking. If you're interested in speaking on July 28th, please reach out to Alex or I.

The mystery could be you.

It could be you. 'Cause it is definitely a big mystery right now on who's coming out to speak. But, uh, yeah, July 28th, don't miss it. The last meetup, the man here brought in 110 RSVPs.

Wow.

Yes.

We gotta compare that to BT. Yes, so that's, that's at the top there.

Nice. Thank you all for showing up and supporting me. Appreciate it. Just kidding. You wanted to learn about wholesaling. But either way, it was a great turnout. Had a lot of fun. Met a lot of great people. I always like to remind you guys that this is a live show. We're live right now, so you can jump into the chat and interact with us and ask questions. And you're gonna want to ask questions. You're gonna want to comment because we're doing something special. We're giving away stuff today. Slowly turning into a morning radio show. And I love that we're giving away, giving away free, free, absolutely free to you if you comment, uh, or ask a question, and we'll choose somebody at the end.

And you can all get it.

Oh, you can all get it?

Yeah.

Okay. All right, everybody comment, you get the special comment gift. Uh, we're not going to tell you what it is just yet.

You comment on YouTube, and let's pick a word. How about assuming? Okay, you comment assuming, and that means that you want the free gift. Yeah, and we will tell you what it is right at the end.

Yes, we're assuming you want to get rich and wealthy, so we're going to give you something to help you do that. Perfect, perfect. All right, let's stop messing around. Let's go ahead and bring our guest in. Today we have Stephanie Howarth. Stephanie, how you doing?

I'm great too.

Thanks for coming.

I'm giving away stuff too.

Oh my gosh.

Yeah, it's a giveaway week, I guess.

This is amazing for the holidays.

Am I close enough?

Happy birthday. Yeah, bring it in if you can. There you go.

Bring it in.

Nice.

Happy birthday, America.

Happy birthday, America. Very cool. Well, yeah, why don't you go ahead, jump in, give a quick bio, and then let's start talking assumable loans.

I am Stephanie Howarth. I am so glad to be a part of H&M Realty. Best brokerage in Laguna Hills. No reaction from Joe.

Number one podcast.

Yeah. But I'm just happy to be in real estate and learning all the things about real estate. And we just closed an assumable loan purchase in Mission Viejo, California, which was a huge message to the world of buyers that you can get As low as a 2.87% rate in today's market. Stop bellyaching.

Yeah, that's insane. All right, let's, let's jump into it. That's, that's nuts. So break it down for us.

Well, first of all, you need to have like a platform in which to search for these assumable loans.

Okay. Did somebody already create that or do we have to do it?

We're working with an online Oh. A platform called Roam.com. And that platform identifies which loans are on the property that are assumable. So you'll have a slew of listings and, you know, some are identified as FHA and some are identified as VA. And those types of loans are assumable. And if we can figure out when, you know, if there's a Loan balance to assume, and the rate is nice and low. Then bada boom, bada bing. It's so easy. Come work with us. We will get you that too.

Are all loans assumable?

No. Great question. Well, which ones are FHA and VA?

Okay, and we're talking an actual assumption as opposed to a subject to deal.

Correct. You're actually qualifying for the finance portion. of the home.

Okay, so the only difference is that you get to keep the 2.7, whatever you said, interest rate, correct?

Correct. Well, and then, you know, if the market obviously has come up since the last purchase of the home, there is, there is a gap, what we call. in the industry. And that is how much value from the finance portion to the market's value now that the purchase— the buyer should come up with to purchase the home. And you could do that with capital, or you could do that with a HELOC or, you know, creative financing to come up with the gap and purchase that home.

What's the lowest gap that you've seen?

Smallest? I would say $50,000 to $70,000.

Okay. I've actually seen them $5,000 to $10,000.

Outliers.

Yeah.

Yeah. But you're going to be living in a desert.

Yeah.

Oh yeah.

What did you say today about Hemet?

All roads lead to Hemet.

Yeah.

Yeah.

That's right. Stand by that.

If you want affordability, that's where you go.

Is there any place that you can find these? I mean, are they all over? Are there certain spots?

Well, what's great about working with a platform like Roam.com, with Roam, with Roam.com, you can use that as a search engine just like you would use Zillow, but it identifies the homes in which have the assumable loan.

Okay. And if somebody wanted to just reach out to you and say, You know, can you help me find a home? Are you able to do that as well?

Absolutely.

Okay.

Absolutely.

And when you're finding a home for somebody, what's, what's the vetting process? Number one, let's start with how you vet the buyer to purchase this home and how you vet the property.

Okay. First, we go through discovery with the buyer. Do they know the process that they're getting into? Do they know how much they have how much purchase power they have. And we get them prequalified with a lender as soon as possible.

Okay. And why, why, why go through that process? What's the purpose?

Well, if you're looking at these great deals online, you might be misled and have a misunderstanding that you can swing at it, you know, without being vetted to know if you even have money To qual— like income and savings to qualify for the purchase of the home. So we want to make sure that you can take a swing at the house that you're looking at.

So it doesn't sound like it's any different than qualifying for a regular loan for a house, because that's what you need to do to assume that loan. Yeah.

So I would love this segment, the takeaway to be purchase power. Do you Know your purchase power. If you know your purchase power, then we can go in all creative directions— assumable, traditional, creative financing, whatever. But do you know your purchase power? What are we working with?

Okay. And how are we vetting the house?

This is my favorite part. Yeah, my favorite part, because I would like to, you know, just have buyers come in that have already discovered their purchase power and we get right to the bolts and nuts and the What I like about identifying the property that is the buyer that the buyer is considering this property, find out if the listing agent even has a clue that there's assumable financing available on the property. And that's a great read for me because I want to know what kind of listing agent I'm getting into a contract with. Right? What kind of transaction? And it leads from the beginning. Like, when I have the conversation with an agent who doesn't know about the assumable loan, and they're kind and warm and have great rapport about learning about the assumable loan, then that's a green light. If they're closed-minded and like, what are you talking about? And I don't want to learn, then that says a lot moving forward. And then, you know, sometimes you have a listing agent who does know the financing on the property. And that's fun too, because then You can have, you can expedite the offer situation. So then we get the listing agent on board with the assumable loan information, and then we move on to the seller. We have the listing agent have a conversation with the seller and make sure that they are on board as well. And then the seller reaches out to the lender. So this is three gatekeepers, you know, two. The seller side of the property, but I love this stuff because then I get to work my charm with all of them. Right? This is the relationship connection part of the deal that I like. And so once we get the seller talking to their lender about the possibility, the opportunity of the assumable loan, then we can move back to the buyer and say, "Yeah, they're greenlighting this project.

Let's go forward with a." And I like how you say gatekeeper. So you've referred to gatekeepers in the past when we've spoken, and most of them are the listing agents themselves.

Absolutely.

If they're not on board, basically, they're not going to give the information to the seller. What, what, what kind of gatekeeping are they doing? What are they telling you?

Well, number one, it's pride. And they're caught with their hand in the cookie jar, not knowing what the financing is on the subject property that they've listed. So it's pride that, oh gosh, I don't even know about assumable loans. And so if their ego is on guard, then that makes it difficult. If, if the person is not knowing about assumable loans, but they're eager to learn, that's rad.

Okay, so you get— you get— you kind of have to almost either talk them into it or at least explain it to them, like, this is possible.

Yeah.

Okay.

Yeah.

And like, you know, we just recently worked with someone who, uh, was very prideful, and they ended up taking the information and using it for themselves and marketing You know, they changed the listing to include the low rate. And all of a sudden, they were knowledgeable about assumable loans. So, you know, I still think that that person had a pride problem. But it turned out to be willing to work.

Okay, and can anybody buy FHA and VA loans? Is there any restrictions on that? What do you know? What are the restrictions, if any?

Okay. So with FHA, you need to be owner occupied. When you purchase, you're purchasing your primary, you're going to consider that your home as a buyer. A VA loan, you could be an investor and picking up a VA assumable loan property and having it tenant occupied or a second Home, vacation home. It doesn't have to be your primary residence. The issue with VA loans, though, is that the seller must leave the VA entitlement with the property. And we haven't gotten into it, into the weeds yet with the entitlement, but we are investigating the idea that, let's say, a VA has an entitlement up to $1 million, and they're only using $400,000, $500,000 on the subject property, we might be able to divvy up their entitlement and they can still take it to go purchase another property. We're exploring that avenue. Of course, it's all nuanced and it will be left up to the lender to really hash that out in underwriting. But bottom line is, the VA loan needs to be left with the property if the buyer is not a VA themselves.

Okay, and what is entitlement?

What the VA seller purchased, how much he was qualified to purchase a VA loan to purchase a house.

Okay. And it sounds like this is something that if you serve in the military, this is one of the perks that you get at the end of the day is to be able to buy a house with really no money down. But they give you a certain amount. And then that's on that loan. And you, if you let somebody assume it, then you can't take it with you to purchase another house.

Yeah. And the great thing about VA loans, you'll notice that since you don't put much down to purchase a home with a VA loan, then a lot of the loan is still intact to assume. Whereas an FHA might be more on the down payment originally. So there's less financed in the loan to assume. Are you pacing with me?

Yeah.

Or am I making it very—

Are you tracking?

Yeah.

Oh, good.

Yeah.

Because it gets, it gets a little nuanced. There's a lot of little bends in the road. But once— I always say this since I got into real estate— once you know the rules, play the game. If you're on the sideline going, oh, the rules are too hard, I can't understand, well, you know, then you're not going to play the game. You're going to sit on the sideline and watch other people make money. So as long as you know the rules, wrap your brain around the rules, And work with the rules. You win. You can play.

Is there a timeline that it takes to close a transaction like this?

Well, you know, we get quoted 45 days.

Okay.

From the lenders.

Right.

But it's real estate. At the end of the day, we're waiting for the fat lady to sing. And our most recent one took over 45 days. To the complete irritation to the buyer, right?

Yeah.

But, you know, but such is real estate.

These transactions— I was just going to say, these transactions are not anything different than a normal real estate transaction with a normal first-time buyer. It's really all the same. It's just a different vehicle that you're using to get to where you want to get to.

Yeah. I think also There's policies with lenders and the different lenders have different policies. And so what I've heard is that VA loans, you know, company policy is to close within 45 days. That's their aim. But they definitely take the full 45.

Yeah.

Yeah.

You're not going to close any sooner than 45.

Yeah.

They like the underwriting time.

They like to flesh out the The lender is like the main person who takes forever and screws up everything.

A normal, yeah, a normal transaction.

Yeah.

We should go back to the warm body loans where it's like—

I agree.

Boom, boom.

Yeah.

Just put a stamp on there and push it through.

Give me your Social Security number. Yeah.

How much do you make?

How much you want?

Write down on this napkin how much you make.

Let's go.

Stated income.

Yeah. We were looking at an $8 million house on the beach earlier.

I'm good.

Do you qualify? I do. Okay, there you go.

Yeah, I think you do. Yeah, you know, I mean, is that why, you know, maybe we ought to do like an 80-year loan or something? It's like, can you live there 80 years?

And like, yeah, you know, if I keep taking supplements.

Um, but do you care?

No, no, I don't care.

You've lived there 80 and, you know, 81 doesn't come around, but hey, you had beautiful 80 years.

Exactly. Yeah, it's good, good for me.

Yeah.

Is the 2008 the reason that the lenders are the way they are now?

There was a—

They'll get all the way to the end and then be like, sorry, it doesn't qualify. Even though you got prequalified and you find your purchasing power. We've had this happen where you get to the end.

Bunch of times.

And then there, for whatever reason, some guy in an office is like, actually, never mind. You can't afford this.

I just had it happen on a listing three days before closing. They refused to issue closing docs and said we actually are denying the loan.

Yeah, honestly, that's pretty rare.

Yeah, yeah, yeah.

I don't know because we had it on a mobile home as well, right?

Same thing.

Yeah, yeah. I honestly, it's pretty rare. That's something that I always ask the buyer, buyer's agent. To get cross-qualified with my preferred lender to hopefully avoid things like that. Because a cross-qualification process with a lender means that if you and Alex are getting a loan, okay, if your lender can't do it, my lender is going to tell me I can do it. So at the end of the day, if your lender can't do it, he better have pre-qualified you enough to be able to say I can step in and take care of this. Because if not, then he should have said, you guys don't qualify from the beginning. So that's a small way to avoid that. I mean, life is perilous. You can't avoid everything, even though we tried to.

Yeah.

But don't you think, back to your question about the '08 crisis, regulation changed the whole—

Right.

The world of lending.

Yeah.

I think with the assumable loans, the issue is the lender's not making their fat profit, you know, on an original loan.

Right, right.

Like originating a new loan.

Yeah.

So they're like, what's in it for me? Okay, fees. You know, they want it. I kept telling my buyer, we all want the same thing. We all want this to transact. We all want this to close. The lender wants this to happen. You know, No one's against the objective.

I know.

And when people get impatient, when things are out of your hands, that's like such a hard position to be in.

Yeah.

Life is uncertain.

Yeah.

And how can we master faith, trust, stoicism?

Yeah, really.

In uncertainty.

Yeah.

That's really, you know.

Well, let's talk about Mission Viejo. So you can get assumable loans in Orange County, one of the most desirable cities in the world. How did that happen?

Oh, the gap. Let's just talk about the gap. That's how it happened.

Okay.

So the buyer, this is discovery from the get-go. The buyer was able to come up with the gap. So when you're in Orange County looking at these higher-end price points for assumable loans, then the market value has brought the purchase price up From the financed, you know, loan. This person, the home, the, the seller purchased the home in 2021 and financed $1 million with a 2— I can't say this enough— a 2.87% rate.

Nice.

Right. So that's what's so attractive is that, you know, the buyer can come in and get $1 million financed at 2.87%.

Right, right.

Like, well, I've seen this so often because there's so many buyers on the sidelines just bellyaching. Prices are too high. I'm going to wait till the end of the world and then I'm going to buy. And it's like, you could get a rate of 2.87% today. But the gap is what was so meaningful with this Mission Viejo property because it was $680K.

Hmm.

To the list price was $1.69. And so, yeah.

Yeah, it was a big gap.

Yeah.

Big gap.

Yeah. And mom and dad filled in the gap. No.

No, no, no, no, no. Buyer and mom. Buyer and in-laws. Buyer and in-laws. Capital.

Not even his own parents? The in-laws did?

Well, I don't know where his— Jeez.

Wait, wait, wait.

Now that's scandalous. Where's my nepotism? I'm just kidding.

I'm just joking. I'm just joking.

Did you need like $7 million to buy that beach house?

Exactly.

That's what I'm getting at. Is that what you're asking?

No, that's nice though. I mean—

Now, they did not have to do that. Right. You know, we had financing on top that, you know, they could have done.

A HELOC.

A HELOC. And yes, the HELOC is at a larger interest rate. But then, you know, if you were to combine the two, then you're looking at maybe 4% interest.

Maybe 5%.

You know?

Yeah.

It's still a good place to park your money though. I mean, if you're going to park $650 grand, like put it in a Mission Viejo house.

You could park it in my garage if you want.

Yeah, sure.

Yeah.

So.

That'd be nice.

It's, I think, you know, it's a smart move. And then to lock in that rate, And then when the next upswing happens.

Now, some of the psychology on that listing agent, you know, it was kind of like, I can gouge the market and keep it like it is the highest priced purchased home in that neighborhood. And he was very, he justified it. Well, he's getting a great rate. He's getting a great rate.

Oh, oh, oh, that's how he justified it with the rate.

Yeah, he kept throwing that in our face. Like, well, he's getting a great rate.

So I need to overpay for it. Is that what you're saying? Wow.

And it's like, it was, it was really unfortunate that it was an asshole of a listing agent. Fair to say.

Yeah, that seems to be going around.

Yeah.

Bleep.

Yeah. And it's so real, you know, you want to walk away. This is why I like the investor side so much more. You know, when you're in residential retail market, you get Cutthroat. You know, I think all of my residential retail transactions and all of my real estate purchasing and living, whatever, there's someone who's completely—

Unhinged.

Yeah, just unreasonable.

Yeah.

And just taints the transaction. And You know, I'm an idealist. I want everyone to walk away happy, satisfied, or at peace, you know, with how things went down. So that's my aim as a realtor is that, you know, high customer service.

Yeah, and then that guy gets rewarded with a nice commission for being a douche.

That's, yeah, completely.

And then he's using it.

He's blasting it on his farm. How wonderful he is and what he did. I'm like, you didn't even know you had an assumable financing.

It doesn't matter. Print it on the flyer, send it out.

Oh, yes. Yeah.

It's gospel at that point in time.

It just makes you, it makes you very appreciative to the people that you do work with that you hold in high regard.

Right.

Like the people in this room.

Oh, yeah. No, you do come across some nice ones every once in a while.

Just a few.

They're out there.

They got to be.

If we didn't see—

I don't trust anybody.

If we didn't see the assholes, then we wouldn't realize how wonderful we have. You want me to keep bleeping that?

Yes, please. Okay. Yes.

We have children that watch the show.

Yes. So Joe knows this, but—

Bleep.

If I have a run-in with a realtor that I don't like, he ends up with a nickname or she. Right. Yeah.

Yeah.

So some good nicknames. So Joe is—

That's all of them that she's worked with.

Yeah.

We're still looking for the nice one.

Yeah, we're still, we're still.

It used to be like you get a nickname and I consider you part of the fraternity.

Right.

And now it's like, no, I got into real estate. And if you get a nickname, you're no longer my friend.

That's right.

So I think Joe's concerned that I might—

It's a long list. Say this nickname for this guy.

Oh, say the nickname.

No, it's fine.

Yeah. What's that first conversation like? This guy doesn't know it's an assumable loan. What is that first conversation like?

Well, here's the thing. One of my philosophies in life is leadership sets the tone or how the relationship starts is how it's going to go. And so not so much the conversation. I gave him the secret sauce. Hey, are you guys willing to, you know, talk about an assumable loan offer? You know, and so it went, you know, typical. It wasn't anything notable about that conversation, except for I turn around the next day and it's in the listing description. And I'm like, okay. But the the part that really gave me the understanding of how the Transaction would go with this guy is he left me guessing a lot. So when I go to show the property, he did not tell me that he opened the Supra, opened the house, turned on all the lights, and was parked down the road. I went through the showing instructions, and I was following the P's and Q's on the showing instruction. So I show up, and I'm like, "I can't get the key out of the Supra." Can you please furnish me? He had like extra codes. You know how you can have a Supra with extra codes on it to open it? Yeah. And so he had like, you know, Fort Knox on the Supra. And I'm like, can you furnish me with the code? I'm trying to open it. He's like, it's already open. He didn't tell me. He didn't text back. So then I'm like further investigating the property. I'm realizing it's open. I'm realizing the lights are on. I'm knocking on the door. Real estate, you know, like just Leaving me insecure and guessing, and I'm like, man, it's like my ex.

You know?

Psycho.

Yeah. And then so that was like very telling. Like, ah, this guy is going to leave me guessing a lot.

And he was down the street.

Yeah. And he wants the upper hand. So then during the inspection, because we did you know ten day inspection contingency or even seven day, it was quick. So we immediately got on property for the inspection. And he came in during the inspection unannounced with like a filter for one of the hall vents. And we're like, my buyer is like, who is this guy? Yeah, who is this guy? Just leaving all of us like to wonder. And I'm like, that's just bad rapport. And it's kind of like passive-aggressive.

Oh, yeah.

Yeah.

Well, these agents believe that that is their house.

Yes.

He thinks he owns that house at that point. I'm surprised he didn't come out in a bathrobe. He's like, what are you guys doing here?

Yeah, yeah, it just—

yeah, again, that was your mistake. That's your mistake.

My mistake?

I might start doing that though.

That I didn't allow him to come out in a bathrobe?

That you didn't know he owned the house.

Oh yeah, yeah, yeah, yeah, yeah, yeah. The arrogance was just like— yeah, so I still charmed him, got him all warmed up.

Oh, okay.

Gave him some Kool-Aid. You know, pushing through.

Yeah. And he stayed till the end of the inspection. I'm like, mother ever.

You could just be like, you're dismissed.

Beep.

Yeah.

Yeah.

Now to be clear, he did not own the house.

Right.

He just acted like he did.

Yeah, for sure.

Yeah. That is very protective.

What can you do as retaliation against those people? Anything?

No, because then you get it back on yourself.

All right.

Yeah, you're right. You're right. Just let it be.

Yeah.

Okay. Let it be.

Let it be.

Let it be.

We'll get copyright strike. That's good. Yeah, as long as you did. Seriously?

Yeah.

Let it go.

We'll have to pay the Beatles. We'll have to pay the Beatles.

Oh gosh, are they all still alive?

Oh, just Paul, right?

Ringo.

Paul and Ringo own this episode.

Ringo's still alive?

Yeah, Ringo's the youngest one, I think.

Ringo's the one— he's got like podcasts, 4 bands.

No, you know, those guys died. What did they die of? Yeah. Drug overdose or something. It's like, yeah, no kidding.

No, no, no, no. Died from no, no, no.

One guy died of cancer. Yeah, one guy was assassinated by the CIA.

John Lennon.

Yeah, yeah, I know that.

George Harrison died of cancer.

Yeah, actually no drug overdose.

That's because he was smoking ganja weed or something.

You know, like you went full blown hard.

I heard that's medicinal.

Exactly. Your dog's gonna live to be 200.

That's what the CIA keeps telling people. You know, it's medicinal as they're breaking in the bus. Yeah, yeah, yeah.

That's true. Yeah.

At this point, Bob Marley was killed.

Yeah. By this guy.

Not Ganja.

No.

Yeah.

Let's see.

Anywho, so how did we get on that tangent?

So yeah, I guess the, the rest of the transaction. So it's getting to the, towards the end and the buyer was wondering what was going on. It's taking longer than 45 days. How is it working with the lender? Are they looping you in?

Depending on the lender, this particular lender, large corporation. So it was like, who's assigned to the file? Who's treating us? Like, who's, who are we? What's the pathway of communication? Who are we talking to? You know, so there's a lot of that. And the crazy thing is that the buyer's sister had already gone through the same, coincidentally, the same purchase on her home with the same lender. So the buyer was educated on what an assumable loan purchase looks like.

Okay.

And so there was a lot of confidence that it would go through and still insecurity from the buyer side of how is this going to play out? Uncertainty, insecurity. Will the lender approve this? What should we expect?

Okay.

And there was a lot of looking to me as an buying agent of, is this how it always goes down? And I'm like, every deal's a snowflake. That's how I say it to every client. Every deal's a snowflake.

This is so normal. This is right on track. Everything's good.

That's what he wanted to hear.

Why do you tell him that?

Well, because then something else would come up that—

No.

And then something comes up, you're like, yep, I knew that was going to happen. This always happens.

Okay.

Any client of mine is gonna get the truth from me.

Oh God, that sucks.

I know, I know.

No, no, that's probably better.

I'm a rare breed, but yeah, you're gonna get the honest truth.

No, it's better. Well, it's funny 'cause Lauren had a listing agreement or no listing appointment. And so we went out to Hemet.

Did she go alone?

No, no, I went with her. So we walk it and the guy's like, I don't really want like somebody to just tell me the warm and fuzzies. You know, I want the truth. So Lauren gives him like what she thinks it could sell for. And then he goes with another guy that just straight up lied to him and told him he can get way more.

So, and now it's sitting. Yeah.

So he wants the warm and fuzzies.

I'm sorry, but that was your mistake.

Exactly. Oh, I was telling you, he loves pointing that stuff out.

When you go out to a listing appointment, if they wanna list it at $1 million and you just told 'em $800,000, you go, I can do that for you. You get the listing and then you beat 'em down on price. When it's not getting any showings, that's but at least you have the listing. Yeah.

Okay.

We just all do better next time.

This I'm blaming him, not you.

I told her to do that. She's like, "No, I don't want to like let him down," and all this stuff. I was like, "Give him the warm and fuzzy." That far off though.

It was like I said, obviously, on a home, there's no gap.

He wanted a certain number, and he was unreasonable to begin with.

It was like, "I need to find a new place to live. I need to live here when it closes. I need to like." That's fine.

And I was just like, yep, all right, we can, we can look at all that.

More problems than, you know, you wanted to take care of. So yeah, I agree with you, let it go. No, no, it was a let it go, but I was like, let it go, move on, don't look at the listing anymore, you know.

Just, I didn't even look at it, it just came up when I was running comps and I was like, oh, there it is.

Yeah, no, it's gone.

Yeah, once the transactions It's gone. Let it go.

Yeah, no, absolutely. But warm and fuzzies go far is all I'm saying. These people kind of want to be told what they want to be told.

I need training.

It's literally when they tell you this is what I want, you're like, yeah, exactly.

Yeah, I'm learning. So we just went to a listing appointment, Joe and I, and he, he takes me along so I can, um, learn.

Learn. I need to go on one of those. I haven't been on one yet.

Come, it's great.

Learn.

So the lady, she's smart. She's, she's a good— she knows what her market value is. So she wants to sell at $1.4 million. And the, the active listing in the, in the neighborhood is $1.58 million. But it's sitting, you know? And so I'm like, we're brainstorming. Joe's like having to bite his tongue because I'm learning and flubbing right in front of him. And I say, 145 is what I was thinking of. And he scolded me on the ride home. He's like, she's at 14. Be the dynamo. List at 14 and get 149. You know, like, be the superhero. I'm like, I was trying to give her the honest truth of what I think it should be listed at.

The honest truth is the worst.

Thank you.

Nobody wants that.

Is that just a guy thing that we understand that? It seems obvious to me. I mean, I don't want to be sexist here, but I'm old enough to say that, you know, it must be a guy thing.

I think being sexist is just you.

And go for it.

I own it. I'm fine.

Yeah, I'm fine with it.

I'm fine with it.

I'm fine with it.

I'm so— your generalizations of my kind is so refreshing. I'm so tired of people thinking that I can live in a man's world.

Why are you changing somebody's mind when they're at $1.4 million? You know, honestly, it's not to make yourself look better.

Do you want to really know why I was? Because I cared about her and I wanted her to have the value of her home. I was inexperienced on the listing price. I'm more experienced in assumable loans than a listing appointment.

I keep bringing all this back to what I keep telling you, quit Being a mommy.

Oh no.

Okay, you're not their mommy.

Sexist.

You're not.

It's like not gonna happen.

I'm gonna be a mommy and you're gonna be sexist and we're gonna be happy people living out our personality.

If their mind is set at 1.4, we list it and we sell it at 1.49. Don't you think that's better?

Yeah, I do now. I see the light now after the scolding. I got it, but I had to Be told. It's just not in my nature.

It's when someone just tells you something, just agree with them.

I'm learning.

Okay. It's like, but you don't have to be like, yeah, but like take that out and just be like, mm-hmm.

Yeah.

Yeah. That's good. That's a great price. That's what I'd be starting at.

I think I come from such a place of one of my principles in life is just to be authentic. And so I just, blowing smoke up someone's ass is really hard for me to do. You're gonna beat the whole episode.

Geez. It's, it's more doing what you want rather than serving that person, which is they want what they want. Yeah, Alex, give that to them.

I, I like that. I can, I can align with that.

Yeah, yeah.

This woman had a stripper pole in the living room, okay? And we asked her, what are you gonna do with the stripper pole? And she says, well, I need, need it, you know, I exercise in it every day, every day, you know. And then she wants to go up to 145 with the stripper pole in the living room.

True.

Like, come on.

True. I was all for her taking it.

Sorry.

Right.

But here's the funnier part.

So we're doing the walkthrough before we sat down and talked numbers. We're doing the walkthrough and we discovered the stripper pole. And she goes, my kids and I use that every day. And Joe goes, would you demonstrate? Amazing.

Yes.

What else am I gonna say?

She's been working on it.

She uses it every day.

Yeah, can you demonstrate? And I got hit upside the head as I'm walking up the stairs.

Yeah, you guys make a good team. That's why you guys make a good team.

What did I say? I didn't say anything bad.

I'm like, more of this, Joe.

I didn't say anything bad. No, we loved it.

That is good.

We had a good laugh.

That's so funny.

No, just him and I.

Yeah, yeah, she, she did not know how funny that was.

Did you get the listing though?

Not yet.

Oh, okay.

She's working on her purchase power. Did I mention discovery of purchase power is really where it's at?

And let's see, buyers are liars, sellers are liars, lenders are liars, agents are liars. There's a lot of liars out there.

I know, but I still believe in the world. This is heartbreaking.

You can't beat them, join them.

We have a couple questions.

There's people watching this podcast?

Yes, we're the number one podcast in Laguna Hills.

We've got Liz asking, how do you educate clients who are skeptical? Gosh, wow. Skeptical or unfamiliar with assumable loans?

Skeptical buyers. They just— are we— well, she's not here to ask. Are we talking about people who don't believe that there's assumable loans out there?

Yes, that's what she's talking about.

Or just uneducated? Like, how do you educate them?

Yeah. I shake their shoulders and say, there are assumable loans out there. Here's withroam.com. Check it out for yourself. It's as user-friendly as Zillow, and it helps you identify the low rates. So some of the assumable loans are still a higher rate, you know, close to 6%. So—

Is the education process to buyers different or the same as to the listing agent? And the seller?

Oh, the listing agent is the crux. The buyers are like, I need any kind of hope in this world. Do you have a low rate for me? Yeah, I do. And then they're like, tell me more. Right? And then the listing agent is, I haven't looked up the financing on this house yet. And it's their listing. And they're like 7 to 20 days on the market already, you know. So the listing agent is the crux.

They're the gatekeeper.

Gatekeeper, the crux. Like, that's the person I have to mentally, psychologically massage.

Okay. Have you ever had any of them tell you that it's illegal?

No.

No.

Have you?

My— yes, my broker says I can't do that.

No, but some of them say, oh, is this subject to?

Yes.

Yeah. So they don't realize that.

They don't know the difference.

Yeah.

Well, I'm surprised that they even know the word subject to if they're asking that question. So I always say, well, they're legitimately qualifying with the lender to assume the loan. It's okay. I'll hug you after this. It's going to be fine.

Okay.

Yeah.

Have you ever tried using like a third-party story to explain to the listing agent?

Third-party story?

Little Red Riding Hood?

No, like when I would bring up sub-2, I was like, hey, what's going on with this listing? Like blah blah blah. Yeah, I was just wondering, we just— I just had a client, they, you know, they bought a house down the street and, you know, it was a house that had been sitting for a while and We figured out that the loan was assumable. So, you know, you kind of just paint the picture. So we ended up going through the process and then the seller was really happy. The listing agent got paid and, you know, the new buyer got in there. I'm noticing yours is assumable too. Is that something that they're open to?

You are a wealth of strategy.

It's just, it's a way to like talk about their situation and take them mentally through the whole process.

Yeah.

And say that you've actually done it before. Now you can use this Mission Viejo one. Like we just did this on a $1.6 million house. You have you know assumable loan. Is that something they're open to?

Yeah, that's a great idea.

Just to it's almost easier to talk about.

Because I think the issue for buyers when I'm qualifying leads and I'm getting these leads, Joe and I have leads through this source, and they come to. Us asking about assumable, what is this? What does it mean? What's the process? You know, and the biggest thing for them, the concern, the fear is the gap.

Oh, yeah, yeah, yeah.

You know, and so they kind of have an idea of what an assumable loan is, but like, what's this? You know, and how do we do that gap? And so to be able to explain the gap in that way with a third-party scenario.

Oh, right.

Right?

Yeah.

Super. Super helpful.

Yeah, for sure.

Yeah, because people really, at the end of the day, it's the unknown. It's like, rates are high. That's just a feeling. I guarantee the people who are complaining about high rates are not the ones who have really tabulated. Is that an old word, tabulate?

Calculated. Why are you looking at me?

Oh, shoot. Because we're in this, we check the same box, that's why. I don't know. Gosh, scolding.

Joe just had his 50th birthday party.

Yes.

Thank you.

Thank you.

And I'm 52.

You are older than me, aren't you?

Wow.

Okay, so get me back on track.

Another video.

Oh, I got another question. Question, sorry.

Yeah, I'm calculating.

We've got Andy Homs, realtor, in the chat. If a buyer is assuming a VA loan, what is the approval process? Does the property need to be reinspected or reapproved, or is it just the buyer that needs approval?

Just the buyer.

Great question.

Yeah, that is great. And congrats, Andy, on the completed flip. It's live. It's active.

Yes, it is.

Best flip in Laguna Hills.

And he did it all himself. Yeah, he—

and he looked good doing it.

Got taught by an expert.

You think?

Yeah.

You had the best mentor in Logan Hills?

Yeah.

Okay. And then we have Liz. She says, happy 4th, everyone.

Happy 4th.

Freedom isn't free.

That's right. So it's just the buyer. They don't have to reinspect the property or anything?

No, the only inspection is for the buyer themselves. There is an inspection.

Yeah. And in fact, that's nice. We did not even have an appraisal done.

Whoa. Wow. Is there any, like, when you're talking about these large gaps that make a down payment potentially more than the standard 20%, or if someone were going to get their own FHA and get that low down payment benefit, is there any sort of assistance or additional loans or anything that anyone can use to—

The HELOC.

To cover that?

Yeah.

So the home equity line of credit is established on the property itself.

And how much will that cover usually?

It's the qualifying property. So, you know, for the situation that we just closed on Mission Viejo, had they gone with the HELOC, they would have financed $680,000, you know, put their down payment toward that.

Yeah, usually 80 to 90%. Yeah.

So then all you got to come up with—

because it's a HELOC, it's not— that's normal, right? You know, you're living in the property and stuff, right? But it is definitely at a higher rate.

Okay, what are we talking, like 10 standard rate?

8, 9?

Oh yeah, yeah, yeah, 8, 9.

I was gonna say high 10, but then you get a blended rate at that point, correct?

Let's go with a more reasonable case subject, you know, that Maybe the house is now listed at $1 million and the finance portion is high 7s, let's say 8, you know, so they're HELOCing $200K. Does that make sense? So yeah.

And, you know, like we said before, this is purchasing a home. You need to qualify. You— we would like to see at least 20% down. This is not a normal FHA or VA type situation, you're just getting the interest rate, right? That's it.

Gotcha.

You're not getting— which is, I think, what the producer was asking— you're not getting a low interest rate for the entire purchase price. I wish. Yeah, let's go back to that and warm body loans and—

Yeah, you know, nothing bad ever happened from that.

Paycheck loans. Yeah.

So I have some clients who ended up getting pre-approved last year They are VAs. Both of them are military, and they got qualified for an $800K purchase, and they decided to rent because they did not want to spend, you know, I believe it was $7,000 a month, you know, to purchase a home in Southern California. They went ahead and got a rent, a rental, a 3-bedroom, 2-bath for $3,850, I believe it was, a month. So they're not building wealth, but they're cutting their payment, you know, substantially, right, monthly. So to get them in to see an assumable loan at this time, they come in with purchase power not only for the amount of money that they make, but the VA portion. They can allow a VA— they can come in as a VA purchase and allow the seller to take their entitlement to another purchase.

Oh, that's cool.

So that's the kind of purchase power there is. It's not just your income.

Yeah.

It's purchase power. Do you have the terms, the conditions, and the income to? Do you have the capital? Do you have anything saved? In this case, they have a fighting chance with the VA loan, you know, entitlement that they have themselves.

So gotcha.

Any more questions?

That's it for now.

Should we do some any videos or yeah yeah yeah do some videos. Let's do videos.

I just wanted to throw the questions in because it was. Relevant to what we were talking to.

Good job. So producing over here.

That's why you're the producer.

Yeah, she's the best.

All right, you lost a listing, but we won't go there.

I only work with investors on listings.

Okay. Oh my gosh, you sound like my daughter. Yeah, my dad and I are going to a listing, and I only do the pretty listings. I don't do the ugly ones. Okay, got it.

All righty. First video is you need to know this about VA assumable loans. Here we go.

The number one mistake real estate and mortgage professionals are making right now about VA assumable loans, it's not letting people know about the down payment that's required. Don't get me wrong, assumable loans could be great for some people, but let me explain. Anyone trying to assume a VA loan, whether they're a veteran or non-veteran, has to cover the gap between the current loan amount and the sales price of the home. Okay, here's an example. Let's say a veteran purchased a home in 2020, 100% financing with a super low rate around 3%, with a loan amount and purchase price of about $500,000. 4 years later, the veteran wants to sell their home that is now worth about $600,000. Keep in mind, the veteran has been making payments for 4 years, so their loan balance is about $455,000 now. The person wanting to assume their loan would have to come up with the difference between the current loan amount and the sales price of the home. In this case, the buyer would have to come up with $145,000 to cover the gap to make this deal work. Make sure to follow me for more home loan and real estate tips. What's the number one? The number one mistake real estate and mortgage professionals.

I mean, we just we talked about it kind of.

No, but he's saying it's not letting people know about the down button didn't work.

Yeah.

Oh yeah, maybe he's saying that there's a problem with coming up with the down payment now. Like there's a secret, you know, hiccup in the. There's a snafu, and I'm like, where's the snafu? That 145k.

I think he's just saying people maybe don't bring that up to. Other, like the buyers that they're going to have to cover the gap.

That gap too, the difference was only like $25K on a 20% down payment on $600,000. So it wasn't—

Well, because yeah, you use like a $500,000 purchase price.

And like we have such skewed ideas of price and affordability in Orange County that that seems like a no-brainer.

No kidding.

I know.

Yeah, like, where's it at? I'll buy it right now.

That's a third of what we're dealing with on the— yeah, our purchases. Yeah, yeah.

But wherever they are, they can't look out and see the ocean. That's the difference.

Now they can.

They turn on their virtual TV, watch an AI clip. Yeah, with music background.

What else we got?

We got— let me check my buttons here. Okay. We got working with buyers versus how to actually wait. Sorry, working with buyers versus how it's actually like.

Congratulations on buying your dream home.

Let's go!

Oh wait, this is not champagne. So are you still interested in that house that we looked? So are you still looking at the house that we were going at last week?

Are you?

Are you still looking to buy a house? So how's it going? Are you still looking?

Congratulations.

Yeah.

The number one mistake real estate and mortgage professionals are making right now about VA mobile loans.

Okay, hold on.

There we go.

That's okay.

Tech is hard. I'm glad I'm not doing it. That's funny.

But is it true?

Is it true?

Yeah. So here's the scenario with the Mission Viejo buyers. You know, we're doing final walkthrough, and it was like they were not excited about buying this house, and I could not read them. And they were like Debbie Downers.

What?

What?

What were they sad about?

They wouldn't look me in the eye, and so I could not read them. And I'm like every turn of the corner through the final walkthrough, like in the final walkthrough was bogus too because it was like a day before they closed. It wasn't like yeah you know. The typical 3 to 5 days before close. So anyway, I'm like, aren't you guys excited? This is happening tomorrow. Like, you know? And they were just like, this problem and that pain point and this problem and that pain point.

And I'm like, yeah.

So yeah, there was no popping the champagne for this.

Well, is it buyer's remorse or is it?

I don't know. I think it just could be 2 parents overwhelmed with now a pool home and 2 toddlers. And, you know, it could have been that.

They're like, oh, this is a, Now that it's so real, they're freaked out.

No, I wouldn't say freaked out. They were just neutral. And I'm like, shake it up. We're enthusiastic. We did it. You know, like you scored. Like you have bragging rights now. Look at you amongst all your buyer friends. You know, this low rate. Like, yay. And what an amazing single-level home too. Pool home. The in-laws are involved. It's going to be the holiday house. You know, as they raise their children. So it's fantastic. But they were much more like when I called them when we closed the next day and gave them the official information, they were like, oh, let me put you on speakerphone so everyone else could hear. So it was nice to have that.

But yeah. At the walkthrough, they were like just not giving you anything.

Yeah.

Yeah.

So you never know what's going on inside their heads.

Yeah.

But it's a lot like that. Do you still want this at all?

Yeah. Right. Right. And doing the follow-ups, I'm sure, is like that as well.

And you taught me with all my leads, the kill switch. That reminded me of the kill switch.

Yeah.

I mean, but it's like follow-ups are like that. It's just like, hey, how's it going? Are you still trying to buy this house? Or then you got tire kickers, I'm sure.

Have you given up?

Yeah.

Have you given up on your dream home?

It's the best. It works.

I know, because no one wants to be a quitter.

Yeah, so awesome.

All right, we got one more. Housing market forecast.

Oh, predict.

We are in a transition year in the housing market. For the first time in many years, there are a lot of homes available for sale. At the same time, there are a lot of would-be home buyers that are sitting on the sidelines.

Truth.

Not willing to buy.

Why?

Well, number one, interest rates are much higher than they've been in recent years. Second, the sellers of homes are not willing at this point to accept lower prices for their homes than what they thought they were worth. What will happen as we move into next year is you have what's known as price capitulation. That's where sellers say, well, I guess nobody's going to buy my home at what I thought it was worth. And they'll become more realistic about prices, and then buyers will start being willing to buy. We are in a transition.

Solid.

We need to get those headphones.

Yeah, I was gonna say, those look like a, like a helicopter pilot or something.

That's pretty cool.

That guy was solid in thought and concept.

Kind of sounds kind of cool.

It's got like a big mic there. Yeah, don't the, the movie stars and singers have the one?

Yeah, the old Garth Brooks.

Oh, gosh.

Yeah, we could get those.

Yeah, and they're wireless too.

Painted on denim.

Yeah, we don't have any of that. Yeah, look at— we can look into that.

What the heck?

Look into that.

When's season 4 starting?

January.

Yeah.

What do you guys think about that?

That guy's solid.

I think Stephanie should take part of her commission that she earned and get us some headphones.

That's only fair.

Yeah, only fair.

Yeah, I think so.

What about, do you think we have to wait till next year for sellers to kind of wake up and—

Capitulation. That's a big word. That's fun to say. Capitulation. Am I saying that right?

Yeah.

He brought up that big vocabulary word. I agree. I don't know how it will play out, but I agree with his concept. There are wimpy buyers and they have been wimpy since the end of '22.

Trump will fix it.

Trump will fix all that.

Trump will fix it.

Some of people are delusional.

Trump will fix it.

Yeah, he's gonna bring the rates down. No, oh, he's gonna bring the rates down.

So she's called me old on this episode and now delusional.

Delulu.

Keep track of that. I think it was Keenan right after, I think it was right after the '05 or '08, you know, issue, you know, with real estate. Keenan got on SNL and he's just like, fix it.

Yeah. Just fix it. Yeah.

Fix it. Just, that's the answer.

Fix it.

You know?

Pretty much.

We'd like that to happen, but fixing it really means stimulating the economy by—

Trump will do it.

By buyer transactions, buyer willingness.

Trump will do it.

And sellers getting a reality check.

Trump will do that too. Yeah. He's going to do all that.

He's going to go door to door and let everyone know.

Yeah. He's going to do all that. I'm telling you, he's going to do all that.

I understand Trump.

He just passed a big, beautiful bill today. Okay?

Yeah.

So if you got any business items to buy, this is the year to buy them. You can write the whole thing off in one year.

Oh. And collect all your income and call it tips.

Oh, that's a good one too, wasn't it? We talked about that earlier.

Commissions, right?

Yeah, we don't get commissions anymore. We get tips. But I think, I think I don't have to read the bill because you know I'm going to. I think there's a limit. I think it's like $45,000 or somewhere around there, I heard.

Okay.

Okay.

That's a good chunk.

So the first 45 of my commission is actually tips.

Yeah, that's good.

Okay, so let me clarify. I believe Trump's doing a kick-ass job. I don't think people are understanding what he's doing, and so therefore they're limp, they're wimpy. That's what I— so yeah, you can say Trump is fixing things, but that doesn't mean that people are receptive to him in office.

That's because you live in California, right?

And feelings. That's why everybody's like, feelings.

Oh, I better not go into song again.

High rates.

I'll get into trouble. And it's really a feeling to pay.

Yeah. Sony is going to be after you.

Yeah. Yeah. Gosh.

President of Sony.

Don't do that.

Yeah. Amazing.

Never do that.

Very cool.

Andy's adding, interest rates will drop, prices will skyrocket. $50K limit on tips.

Hey, that's not bad.

I like it.

Nice.

Thank you, Mr. Holmes.

Yeah.

$50K.

I believe it.

On tips. I believe it. So we need to get an attorney, tax attorney on the podcast and let us know what he thinks about.

She.

Let us know what he thinks about claiming commissions as tips.

Yeah. Someone will do it. There's somebody out there that'll do it and sign their name to it.

Why not?

I don't know.

What's the tax gal that was on here before who's awesome?

Natalie.

Natalie. Drop that name.

She is.

She.

Yeah, she's good.

She's very awesome.

What's her last name?

But I think she's really conservative too, don't you think?

But she'll know what you're talking about. Yeah, she will. Natalie.

Yeah, she doesn't like going into the gray.

Let's drop her name.

Natalie Elser.

Elser. Yes.

Natalie Elser.

Natalie Elser.

She's awesome.

Okay.

And she's a she.

Natalie, if you're listening, come back on the podcast and let us know what you think about tips.

Tax. Tell us how to claim everything as a tip.

Up to 50 grand in tips.

Okay, good.

My client paid me a tip.

Yeah, put it on the— like, they can make any line item on HUD statements or the settlement statements. So, I know.

Can we start giving, instead of referral fees, like, can we give tips?

Tips? Yeah.

Can I mention that to people to source a deal and I'll give them a tip?

Yeah, tip.

I'm posing this as a question.

Yeah.

I know, but there's something in it for people who source deals for us.

I'm just gonna go to escrow closings and turn the iPad around to the escrow officer.

There you go. Yeah, put in $50,000.

Could you put my tip in there now, please? That's a good one.

I like that.

I like that.

That's pretty good. I like that.

That's great. That's very creative.

That's very creative. Thank you, producer. And thank you guys for tuning in today. We had a blast. Thank you, Stephanie, your amazing guest.

How can people—

we're not leaving yet.

Oh, that's right. Yeah, I have a giveaway.

You've got giveaways.

Giveaways. Giveaways.

All right, let's do it, folks.

Here's the book that I wrote on Assuming Advantage: A Real Estate Broker's Guide to FHA and VA Mortgage Assumptions.

There you go.

Okay, just comment assuming, and I will send this out to you. Okay, now you're not going to get a hard copy. You're going to get a digital copy of this book, but it's the same thing. It's the knowledge is very well written book. Okay, it's got a lot of good information, a lot of it what we talked about today. It's very easy. It's a very easy read. So please comment, assuming in the chat area or wherever it's called.

Yeah.

And we'll send it out to you.

I like it.

I like it.

So thank you for showing up. Appreciate it.

Wait, I have a giveaway.

She's got a giveaway.

Oh, you have a giveaway too?

Yeah, we're giving away a 2-night stay.

Oh, nice.

We are? Yes.

Yeah, let us know.

So we have a listing up in Big Bear City. It's a tri-level, 1,880 square feet, 4-bedroom, 2.5-bath, has an Immense wraparound deck for gazing at the forest all around and the beautiful sky. And we are giving a 2-night giveaway.

Free.

Free.

Wow.

Cool.

Yeah, you'll need to like throw down a deposit to hold your—

And a cleaning fee.

A cleaning fee.

But you're not going to be charged for the normal night stay.

The lodging is free.

Lodging is free.

And it's close to town.

How does that happen?

So go to my Instagram or Joe's Instagram. So we got @howworthit or @joeohoms, J-O-E-H-O-M-S, and you'll find a reel on there that is identifiable and it says, you know, enter to win, and it shows a picture of the cabin from a very beautiful drone perspective. And you'll see the wraparound deck that you could be sitting on if you win the giveaway. And yeah, if you go to Instagram and do as the Instagram reel says, like, follow, share, tag, then you will be entered to win. Tomorrow we are announcing the winner. Tomorrow on Instagram.

On the 4th of July.

Cool.

Big bang.

Okay. Well, thank you for that again. We are the number one podcast in Laguna Hills, so don't forget that. We will see you next week. Rain or shine.

Yeah, we'll be there.

We'll be here.

It's the middle of 2025. Let's make it happen.

Yeah. Let's push people.

Yeah. Find us some fixers. Bring them here. We'll, we'll work into the deal.

Right on. Thank you, guys.

Bye.

If you want some more advice on real estate investing, reach out to us one-on-one.